EPA chief gets earful on ethanol, coal in first visit to ND

Source: By: Mike Nowatzki, Forum News Service, INFORUM • Posted: Sunday, March 2, 2014

BISMARCK – Gina McCarthy said Friday during her first trip to North Dakota as administrator of the U.S. Environmental Protection Agency that she wanted to understand “both the intended and unintended consequences of our actions,” and representatives of the state’s ethanol and coal industries gave her plenty to consider.

Environmental Protection Agency Administrator Gina McCarthy speaks during a roundtable discussion on renewable fuels on Friday, Feb. 28, 2014, at Bismarck State College as U.S. Sens. Heidi Heitkamp and John Hoeven of North Dakota listen. Photo by Mike Nowatzki / Forum News Service

BISMARCK – Gina McCarthy said Friday during her first trip to North Dakota as administrator of the U.S. Environmental Protection Agency that she wanted to understand “both the intended and unintended consequences of our actions,” and representatives of the state’s ethanol and coal industries gave her plenty to consider.

McCarthy visited the state at the invitation of U.S. Sen. Heidi Heitkamp, D-N.D., who has been critical of the EPA’s proposed changes to its carbon dioxide emission standards for power plants and renewable fuels mandate, as well as the Obama administration’s delays of the controversial Keystone XL pipeline.

Republican U.S. Sen. John Hoeven set the tone early during a roundtable discussion at Bismarck State College about the EPA’s proposal to curtail the amount of ethanol sent to market for blending with gasoline, saying that for North Dakota to continue being a leader in energy development of all kinds, “we need EPA to work with us, not against us.”

“We have to be very upfront about this with EPA: They are holding up investment, and we need to find ways to break through that,” Hoeven said.

A federal law passed in 2007 sets yearly targets for meeting the renewable fuel goals by 2022, but the EPA can waive those targets under certain circumstances. Heitkamp and other critics have warned that the EPA’s draft proposal released in December to roll back the renewable volume obligation for 2014 by roughly 6 percent for ethanol would scare off investors and send the wrong message to farmers, ethanol producers, fuel retailers and others about the nation’s commitment to renewable fuels.

Ryan Thorpe, chief operating officer at the Tharaldson Ethanol plant near Casselton, said corn-based ethanol is currently “the cheapest fuel in the world,” and he cited the high level of U.S. ending corn stocks.

“That’s why we feel this is not the right time to roll this back when we have all this excess supply,” he said.

The EPA received thousands of comments on the proposed change, and a final decision on the rollback could come by June, McCarthy said. She said the proposal was based on reduced demand for gasoline nationwide and concerns that the infrastructure isn’t in place to handle higher ethanol blends.

She said EPA feared that putting “unrealistic amounts into the system all at once” would do more to undermine the Renewable Fuel Standard than meet the administration’s goals, but she said the administration is still committed to the standard.

“I need the data to support increased levels coming into the system in a way that’s realistic, in a way that will continue to move it forward,” she said.

Heitkamp said afterward it was a unique opportunity for participants to speak directly to the main decision-maker about how to continue to integrate ethanol into the market, calling it “a huge part of the North Dakota economy.”

“The signal that’s being sent by reducing the amount is really the wrong signal, and it reduces investment and it reduces commitment to this product, which I think is in the wrong direction,” she said.

McCarthy also met Thursday with Gov. Jack Dalrymple, who told her that the EPA’s proposed rules to regulate carbon dioxide emissions must be practical and based on technology that’s commercially viable and cost-effective, according to a news release from the governor’s office.

Dalrymple said the state’s coal-fired power plants continue to reduce emissions and that unattainable standards would undermine the nation’s energy security and could lead to higher utility rates for customers and lost jobs, the release stated.

The EPA proposed new standards in September that would limit carbon dioxide emissions from new coal-fired power plants to 1,100 pounds per megawatt hour, which is less than half the current average of about 2,250 pounds per megawatt hour for coal-fired plants, including North Dakota’s seven plants.

Proposed standards for existing power plants will be issued by June, with states’ plans to meet those standards due by June 2016.

McCarthy told Dalrymple that the 60-day public comment period for the proposed standards for new power plants has been extended by another 60 days, from March 10 to May 9, as requested by Dalrymple when he met with her last weekend in Washington, D.C., the governor’s office said.

On Friday, Heitkamp brought McCarthy to Dakota Gasification Co.’s Great Plains Synfuels Plant near Beulah to see techniques being used to produce natural gas from coal and use carbon dioxide for enhanced oil recovery.

Lignite Energy Council President Jason Bohrer told McCarthy during a roundtable session at the plant that carbon capture and storage technology hasn’t been adequately demonstrated and that the EPA’s rules should instead focus on efficiency improvements that are economically feasible for each power plant, according to a news release from the council.

Heitkamp, who was a paid member of Dakota Gasification’s board of directors before being elected to the Senate, said there’s “a big public policy push on one side to basically regulate coal out of the market.

“And so what we’re trying to do is say look, the coal industry, the generation industry, has always met standards when they’re reasonable. Let’s talk about what those reasonable standards are,” she said.

Heitkamp said she first invited McCarthy to North Dakota when they met during McCarthy’s confirmation process to be EPA administrator, which lasted about four months before she was confirmed July 18, 2013.

Last fall, Heitkamp and Rep. Kevin Cramer, R-N.D., who also attended Friday’s discussions, criticized the EPA for not stopping in coal-reliant North Dakota during its 11-city tour to gather public input on ways to reduce carbon pollution from existing power plants. The so-called “listening sessions” were held at EPA’s regional offices across the country.